This past Tuesday night, August 5th, 2008, various cities across the nation in conjunction with law enforcement agencies and community volunteers, hosted their annual National Night Out, sponsored by the National Association Town Watch, aka, NATW, held on the first Tuesday of every August. Over twenty years ago, a young man saw an opportunity to unite his local neighborhood together to take a stance against crime by coming outside for one night a year. While the program has seen continued growth across the nation as more cities participate, what has grabbed the attention of many folks is the continued growth of the founder's and current president, Matt Peskin, salary. While the average salary for other non-profit executives with organizations of similar size is $70,000 a year, since 1994 Mr. Peskin's salary has grown from $140,000 a year to the current level of $280,000 a year in addition to $42,000 a year in benefits for a combined annual compensation package of $322,000 a year. Up until this year, all of the NATW's income came from a combination of federal grant money, public and corporate tax exempt donations and the sales of National Night Out merchandise to participants however this year the National Night Out program lost its federal funding of $300,000 a year, an amount equal to the organizations annual salary.
To put that amount into perspective, Mr. Peskin makes more than any federal government official, with the exception of President Bush and exceeds seasoned non-profit presidents and executive directors from organizations such as the National Crime Prevention Council, the International Association Chiefs of Police, the National Sheriff's Association and the National Law Enforcement Officers Memorial Fund, all of which have dozens, if not hundreds of employees reporting to them while providing services on a daily basis, versus promoting a once a year event as is the case of the NATW. Mr. Peskin's salary is also three times greater than the average Chief of Police or Sheriff and six times greater than the average salary of a sworn police officer. Further, of the over 17,000 Police Chiefs and Sheriffs in the United States, Mr. Peskin's salary exceeds all of them with the exception of two. Additionally his salary is greater than 98.5% of all American households, generally defined as two wage earners.
Aside from the extraordinary salary, what upsets many law enforcement officials is how else this same federal grant money, totaling over $2.7 million dollars in the past 10 years, could have been spent. For example, in one police department located in the state of New Mexico, they were unable to complete the training of their reserve officers because there were not enough bullet proof vest available for them. Considering the average price of a quality bullet proof vest is $750.00, the $2.7 million grant money spent on National Night Out over the years could have purchased 3,500 of these truly life saving vests. Further it could have purchased over 1,800 Automated External Defibrillator (AED) or over 2,000 AR-15 rifles for members of law enforcement to combat the current rise in violent crime as criminals become better armed. Bottom line is, considering there has been no study showing the effectiveness of this one night a year event, most would agree this money could have been better spent equipping our brave police officers to help protect them, and ultimately the pubic.
What further upsets a number of law enforcement executives I've spoken with is the feeling of being used. One Police Chief in particular I spoke with from a city in the south said "If my officers, who I've asked to come in on their own time to help with this event, knew that someone on the other end was making $280,000 a year while they donated their time, they'd run me out of town and call me a fool. It's kind of like the situation in Iraq: our soldiers and Marines want to know the Iraq Army is out there with them side by side getting it done; not sitting back in an government office somewhere benefiting from their hard work. From what I can see, this dog don't hunt."
Welcome to the World of Pork and Earmarks
So how did a one man non-profit corporation with a board of directors including his father-in-law and his brother with no active or retired members of law enforcement receive grants from the U.S. Department of Justice that could otherwise be used to directly support the needs of law enforcement? Enter U.S. Senator Arlen Specter who represents Mr. Peskin's state of Pennsylvania in Washington, DC. Over the years Senator Specter's web site has posted press releases stating his support for law enforcement and crime prevention by funding the National Night Out program with earmarked funding. For anyone not familiar with the earmark process, in this particular case, each year the Bureau of Justice Assistance, a component of the U.S. DOJ, receives billions of dollars to fund various law enforcement related programs. As part of the BJA's funding, each year they receive a set amount of discretionary funding up to several hundred million dollars that as the name implies, they can use at their discretion to fund various project they deem worthwhile. The BJA is staffed with a host of talented career professionals, including former members of law enforcement, who can best judge how to use these funds. Unfortunately as is all too often the case, once members of congress see an opportunity to fund their own pet "pork" projects, they jump on it quicker than fleas to a dog. So along with the several hundred million dollars given to the BJA comes a list of projects they must first fund and whatever is left over, they can use to fund projects they've taken the time to investigate and evaluate. Sad to say, it's not uncommon for there to be either no discretionary money left or very little to carry out their mission. With that said, each year Senator Specter, as a show of support for his own district back home, had earmarked approximately $300,000 for Mr. Peskin and his one man non-profit, the National Association of Town Watch, aka, National Night Out.
Future salaries are now being capped
In a excellent piece of investigative journalism, reporter Andrew Maykuth of the Philadelphia Inquirer published an article on July 29, 2007, titled Nonprofit is lucrative for founder which examined in part the IRS 990 tax return for Mr. Peskin's National Night Out program. The article brought to light a number of interesting and for some, questionable items on the non-profit's tax filing, with the spotlight being on Mr. Peskin's then $255,000 a year salary. Shortly after the publishing of that article, Senator Specter was quoted in a separate article published by the Philadelphia Inquirer titled Specter concerned by Night Out chief's salary, that read in part, "Sen. Arlen Specter expressed concern yesterday over the high salary of the leader of a local nonprofit organization... Specter, whose Senate pay is $165,200 annually, said it makes no sense that I make so much less than he, adding that salary caps are necessary for workers of any group that receives large amounts of federal money." The article further went on to state that the Department of Justice, which is responsible for administering the funding, has decided to cap salaries in fiscal 2007 for any organization receiving more than $250,000 in federal grant money. Under its new rules, salaries would top out at approximately $180,000. In response to this new ruling, Mr. Peskin replied in part, "Such a limit would have no effect on his salary. He said $60,000 of the grant money goes toward his paycheck, while the rest comes from donations, corporate sponsorship and merchandise sales."
While the source of various accounts may show he only used $60,000 of federal grant money towards his 2007 annual salary of $255,000, there is another federal ruling that all tax exempt non-profits need to be aware of. IRS tax code section 4958 was designed to ensure tax exempt non-profit organizations which receive donations from the public are held to a higher level of trust to ensure those funds, along with federal grant money, is used properly. The section establishes guidelines for reasonable compensation for executives, board members, and other highly paid employees of non-profits. Essentially the IRS tax code requires non-profit organizations to show how they established the level of compensation for its executives that appear to be out of line within their industry. As stated earlier, on average, the salary for other non-profit executives of a similar sized organization as the National Night Out earn $70,000 a year, four times less than Mr. Peskin's annual salary. Needless to say, only the IRS can make a final determination on this matter, should the two ever meet.
Another hot topic currently in the public's eye is the subject of lobbying. As it relates to tax exempt non-profits, it is a federal violation to use federal grant money to lobby for more federal grant money. While there is no indication that federal grant money was used, during the past several years, Mr. Peskin's National Night Out campaign has spent over $70,00 a year for the services of a top Washington, DC, lobbying firm, APCO, Worldwide, which the NATW list on it’s 990 tax return as payment for "research and development". According to APCO's own web site highlighting the NATW as a client case study, "The Challenge: APCO was asked by the National Association of Town Watch... to secure congressional funding for its flagship program, National Night Out... NATW's support in Congress had been declining. The Result: APCO's efforts resulted in Congress allocating funding for National Night Out without any reduction. APCO succeeded in getting appropriations language funding National Night Out placed in both the House and Senate committee reports for the first time in several years." According to the APCO's own web site, it sure sounds like lobbying versus "Research and Development" to me.
But it's for the children
In all fairness to Mr. Peskin and his NNO program, he's not the only one who receives federal funding slated for law enforcement with what some would call questionable expenses. The Boys and Girls Clubs of America provide a valuable service to many inner city children and teens who have no other place to go after school. While no one can argue that providing a safe haven for children and providing them with helpful projects is a good idea, a quick review of the non-profit organizations 990 tax return raises some questions. While as a percentage of total revenue the amount is small, on whole, Ms. Roxanne Spillett - the organization's president - received a 2006 annual salary of $525,000, which is more than the President of the United States receives in a year. Combined with the salary of the top five executives of the Boys and Girls Clubs of America, the non-profit spends over two million dollars a year on just six individuals salaries, not including their benefits and expense account packages.
Additionally in 2005 the Boys and Girls Clubs non-profit spent $1.2 million dollars to renovate the interior of their corporate offices located on trendy Atlanta's Peachtree Street next to the famed Atlanta Symphony Hall. Another questionable item is the non-profits expense of over $1 million dollars on five fundraising events which resulted in a loss of over $700,000. With the expensive salaries being paid to their executives in addition to hundreds of thousands of dollars paid to fundraising consultants one would think they would know how not to lose over seven hundred thousand dollars on fundraising events which cost them over one million dollars to host.
With the average cost of a personal computer in the range of $1,000, that money could have been used to purchase 2,000 computer learning systems for the children they are supposed to be serving or hundreds of mini scholarships for teens heading off to college, books, sporting equipment, field trips, etc.
In the end one has to ask what happened to the good old days when people founded and/or worked at non-profits because it was the good and right thing to do. While many non-profit founders and presidents, myself included, do work for free, no one can expect them to do so. However receiving salaries that far exceed anyone else in their non-profit field and four, six and more times those they serve raises many questions as to whom is really benefiting in the end. Before associating your agency with a non-profit group's activities, it might make sense to first take a moment to review their IRS 990 tax return form to see if any questionable items, such as excessive salary, jump out. By law, each tax exempt non-profit organization, commonly referred to as a 501c3 must send you a copy of their previous years tax return without question, if requested. Another great source for this information is the free web site hosted by Guidestar.com which provides a copy of virtually all tax exempt, non-profit organizations, with revenue greater than $25,000, online for easy viewing. When all is said and done, it's probably best to make sure the people you're hunting with have a dog in the hunt also and avoid the potential for any embarrassing questions in the future from those who volunteer their time to support such activities.
